With the snap-back of U.S. sanctions against Iran just days away, oil markets continue to be jittery, yet prices seem to be rather oblivious to inventory reports from the United States. The EIA’s latest report, is unlikely to change that. The authority reported a build of 3.2 million barrels for the week to October 26th, a day after the API estimated inventories had risen by a hefty 5.69 million barrels, which failed to move prices down.
Last week, the EIA reported an inventory build of over 6 million barrels, with gasoline and distillate fuel inventories down by 4.8 million and 2.3 million barrels, respectively. In the week to October 26th, gasoline inventories were down by 3.2 million barrels, while distillate fuel inventories were down by 4.1 million barrels.
Gasoline production last week averaged 10.4 million bpd, up from 10 million bpd a week earlier. Distillate fuel output stood at 5 million bpd, unchanged on the week.
Despite the positive effect on prices of the Iran sanctions and the potential loss of a significant chunk of global supply, it seems that in the past few days, concern over the world’s economic growth outlook and hence oil demand has gained the upper hand, pushing both Brent and West Texas Intermediate lower. Related: Equinor Strikes More Oil At Giant Johan Castberg Field
Analysts note trade tensions between Washington and Beijing also had a role to play in the recent reversal of oil prices’ fortunes as President Trump said he had billions more worth of Chinese goods to impose tariffs on if Beijing does not agree to a deal soon.
Comments from the International Energy Agency’s head, Fatih Bitol, earlier this week only reinforced this concern. Birol said crude oil prices have gone up high enough to begin hurting demand for the commodity. He noted the adverse effect of higher oil prices on large emerging economies in particular, including India and Indonesia, saying, “Many countries’ current account deficits have been affected by high oil prices.”
At the time of writing, Brent crude traded at US$75.66 a barrel, with WTI at US$65.92 a barrel, both down by a third of a percentage point since trade opened today.
By Irina Slav for Oilprice.com
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